While there are
cases where employees of an acquired startup are let go, there are also cases
where they are merged into the new company or allowed to continue to deploy
their services in the previous firm under the new owners.

What Employees Should Expect
After a Company Acquisition

When you observe
that the company you are working with is undergoing an acquisition, employees of
such startup are advised to remain calm.

While it seems okay
to worry a little bit about what becomes your fate as an employee in a start-up
undergoing acquisition or merger, the best thing you can do is to still maintain
your peace.

According to statistics,
this tension among employees is valid because 30% of workers are considered
redundant after an acquisition when both companies are in the same industry.

This statistics
notwithstanding, it doesn’t necessarily mean that employees of both companies
will hit the unemployment street soon, except the workloads are not much or are
things that can be automated.

What Happens Immediately After
a Startup Acquisition?

Immediately it is
announced that a startup is about to be acquired, a period of silence sets in.
This is typical of what happened when Otedola of Forte Oil announced that he
was about to sell of his shares in the company to move into other business.

Within this period
of silence, it may look like nothing is happening, but there’s so much hard
work taking place behind the scenes. This is the period that the buyer digs
into the financial record of the startup he wants to purchase before making his
decision.

In some case the
buyers also schedule a meeting with employees of the firm they want to acquire
to explore their capacities and observe their understanding of how things work
in the organization.

How Startup Acquisition Will Affect Buyers

Employee
acquisition is never what forms the top-of-mind of any company that buys another.
The acquiring company is majorly focused on growing its portfolio, not carrying
the employees along.

If there’s need to
cut down the company’s expenses, the first thing the acquiring company looks at
is cutting down employees’ payroll.

The reason most
acquiring company do this is because they are constantly trying to avoid waste.
Two businesses with fully staffed human resource teams do not need more hands
when they merge as they may be a collision of job responsibility.

In situations like
this, underperforming workers are laid off.

The Different Buyout Options
and How They Work

There are different
buyout options and how they work are completely different.

We have seen cases
where one business buys another to grow their financial portfolio and expand
their business territory. In situations like that the purchased startup are
allowed to continue to operate as it is.

While in some other
cases, they merge certain things. This happens a lot more when they purchasing
firm is looking into leveraging only on one part of the acquired firm. A
typical example is leveraging the expertise of an established tech team to grow
another business.

First Thing Employees Must Do
When the Company They Work with is Acquired

Redundant employees
often know themselves, so they will likely not be surprised to get a dismissal
letter. But if you’d like to be carried along when the company you are working
for is acquired, you must be up and doing. You do it by demonstrating your
expertise without reservation. Constantly look out for ways to help the company
save cost.

If you have some
specialized skills that make you outstanding, this is the best time to unleash
it.

How Stock Options Adjust After
an Acquisition and Merger

Companies acquired by Amazon

Company acquisition
brings more questions for employees who hold stock options with the acquired company.

Whenever stock options are issued, they usually come with a vesting schedule, which makes it mandatory
for you to stay with the company for a specific amount of time to earn the right to purchase those shares.

There’s a bunch of redundant staff unreasonably increasing the company’s payroll expenses. Nobody tolerates waste, so they will do everything to cut it off.

There’s a collision of job responsibilities in the acquired startup with the purchasing company. No need to have two persons on a role that can be handled by one person.

The manager of a particular unit is laid off. While this does hold true in all cases, however, it’s been noticed time and time again that when the manager of a particular unit is laid off after an acquisition or merger, everyone working in the same unit are also laid off to avoid.

Related

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